Topic 1.5 Understanding external influences on business

Question 1

Who are business stake holders?

Answer 1

Shareholders
employees 
customers
local community
pressure groups
the government

Question 2

How are stakeholders affected by business activity?

Answer 2

Shareholders - wants profits
pressure groups - wan to influence business decisions and action
employees - wants a good pay and working conditions
customers - want value for their money
government - low employment

Question 3

What is a possible conflict between stake holders?

Answer 3

One possible conflict between stakeholders such as pressure groups can be the business unethical decisions. This means that, business is at risk of having a bad brand image. Therefore, can lead to a fall in sales due to boycotting.

Question 4

What are the different types of technology that a business can use?

Answer 4

e-commerce
social media
digital communication
payment systems

Question 5

how can technology effect the business cost?

Answer 5

Can be a huge investment but long term can reduce cost and increase efficiency

Question 6

How can technology effect the business sales ?

Answer 6

innovated products can increase demand from customers and increase sales

Question 7

How can technology effect the business marketing mix?

Answer 7

product - make it innovated
price - can be expensive
place - e-commerce
promotion - can increase demand for product

Question 8

What are the principle of consumer rights?

Answer 8

• goods/services must be as described
• Good/services must be an appropriate quality
• goods/services must be of an appropriate safety

Question 9

What are the principles of employment law

Answer 9

Healthy and safety
being fair during recruitment
not discriminating against others

Question 10

What is the example of the law for consumers?

Answer 10

The consumer right act 2013

Question 11

What is the example of employment law?

Answer 11

Health and safety act
equality act
national minimum wage

Question 12

What is the advantage and disadvantage of following consumer law?

Answer 12

advan:
good brand image (if they follow)
increases customer loyalty
improve relationship with stakeholders

disadvan:
business have to keep up to date with law
can be costly
consumers can take legal action against the business

Question 13

What is the advantage and disadvantage of employment law?

Answer 13

advan:
employees may be happier and more motivated
reduces recruitment cost
disadvan:
meeting health and safety can be costly
not following it can lead to unhappy employees

Question 14

What is the impact of unemployment ? (increase+decrease)

Answer 14

INCREASE:
pay lower wages
reduces cost
apply for grant

consumers have a lower disposable income meaning that the business sales are lower

DECREASE:
consumers have a higher disposable income but they is smaller workforce

Question 15

What is inflation?

Answer 15

When the cost of living /food/housing and other products increases.

Question 16

What is the impact of inflation?

Answer 16

Business:
can cause the business cost to increase

Consumer:
have less disposable income and therefore are less likely to buy the business products and service.

Question 17

What is the impact of raising interest rate?

Answer 17

business - may struggle to repay loans
small business- are less likely to borrow to start up or expand
consumers - Are less likely to spend money as consumer disposable money decrease.

Question 18

What is the impact of falling interest rate?

Answer 18

business - will have more money to spend and cash flow will improve
small business - will borrow money to start up or expand
customers - are more likely to spend their money and their spending will increase.

Question 19

The effect of a fall in the value of the pound

Answer 19

Goods for UK exporters of good - price of exports falls - sales increase
good for UK tourism - prices are cheaper to foreigners - tourism increases
Good for UK businesses - imports more expensive - people buy more UK goods
Bad for UK importers of materials - imports more expensive - cost raise

Question 20

the effect of a raise in the value of the pound

Answer 20

Bad for UK exporters of goods - price of exports rises - sales fall
Bad for UK tourism - Prices more expensive to foreigners - tourism falls
Bad for UK business - imports cheaper - people buy fewer UK goods
Good for UK importers of materials - imports cheaper - cost falls

Question 21

opportunities of external influences

Answer 21

• rise in economic activity - increase in demand
• new legislation increases demand for business’s safety products
• new technology
• lower interest rates makes it easier for the business to borrow money

Question 22

Threats of external influences

Answer 22

new competitors
new legislation that makes the product illegal
fall in economic activity (fall in demand)
new technology can make the business product obsolete

Question 23

what are the responses to external influences?

Answer 23

change company policy
lower prices
increase productivity
cut investment